Comments on: How to Get out of Debt: Step 2 – Debt Payoff Strategy http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/ Personal Finance Blog for Young Professionals Thu, 29 Jul 2010 23:56:16 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: MBC http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-12997 MBC Sat, 12 Jun 2010 04:01:44 +0000 http://20somethingfinance.com/?p=122#comment-12997 A couple of things: I love the first step in stop the bleeding, and I am also a big fan of Dave Ramsey (but he did not invent the debt snowball, com'on). I do however disagree with his method of paying the smallest amounts first because paying off the highest rates first always saves you more money! always. I am surprised this article only touched on really two methods of getting out of debt and barely touched on debt consolidation (which I always talk badly about). This article forgets to reach people who are beyound those two options of paying the debt off and debt consolidation. There is always credit counseling, which lowers your interest rates and puts you in their hardship program, but they don't tell you that most people in a CC program don't finish, and it DOES hurt your credit because they close your credit cards they just don't report you late to the credit bureaus. Bankruptcy. AND debt settlement! Which is a legitimate way of getting out of debt for those who are between a rock and bankruptcy! The problem with DS is all these companies charging 15% of the total debt as a fee (for $20,000 debt it would be $3,0000)!!!. the thing is that people don't know they can do it on their own. there are plenty of places that would teach people how to settle their debts and not pay those high fees. we have created MyBlueChimp.com which offers a <a href="http://www.mybluechimp.com" rel="nofollow">do it yourself debt settlement</a> system. my suggestion though, as always, do your research and take an active role in your finances, because that's most likely why you are in debt anyways. this goes beyound stopping the bleeding: 1. finding out your goals (life goals) 2. Aligning those life goals with financial implications (where personal finance comes in) 3. building the confidence and faith in yourself that you owe yourself more than the situation you are in and, 4. TAKING ACTION sorry for the long post lol, I guess I have a lot to say A couple of things: I love the first step in stop the bleeding, and I am also a big fan of Dave Ramsey (but he did not invent the debt snowball, com’on).

I do however disagree with his method of paying the smallest amounts first because paying off the highest rates first always saves you more money! always.

I am surprised this article only touched on really two methods of getting out of debt and barely touched on debt consolidation (which I always talk badly about).

This article forgets to reach people who are beyound those two options of paying the debt off and debt consolidation.

There is always credit counseling, which lowers your interest rates and puts you in their hardship program, but they don’t tell you that most people in a CC program don’t finish, and it DOES hurt your credit because they close your credit cards they just don’t report you late to the credit bureaus.

Bankruptcy.

AND debt settlement! Which is a legitimate way of getting out of debt for those who are between a rock and bankruptcy!

The problem with DS is all these companies charging 15% of the total debt as a fee (for $20,000 debt it would be $3,0000)!!!.

the thing is that people don’t know they can do it on their own.

there are plenty of places that would teach people how to settle their debts and not pay those high fees.

we have created MyBlueChimp.com which offers a do it yourself debt settlement system.

my suggestion though, as always, do your research and take an active role in your finances, because that’s most likely why you are in debt anyways.

this goes beyound stopping the bleeding:

1. finding out your goals (life goals)

2. Aligning those life goals with financial implications (where personal finance comes in)

3. building the confidence and faith in yourself that you owe yourself more than the situation you are in and,

4. TAKING ACTION

sorry for the long post lol, I guess I have a lot to say

]]> By: Samiya http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-10670 Samiya Tue, 04 May 2010 22:57:26 +0000 http://20somethingfinance.com/?p=122#comment-10670 What a great article and so helpful for those of us trying to repair our credit and are 'coming out of the financial black-hole' so to speak. I actually have been working on the same thing, really identifying how to pay my debts down fast. So, I found this site that offered a 'Pay with Purpose Debt Eliminator.' It incorporates similar strategies automatically and identifies which debts to pay down first and how much to pay! I really like how simple it is. If you get a chance, check it out: www.inoutcash.com Let me know what you think! What a great article and so helpful for those of us trying to repair our credit and are ‘coming out of the financial black-hole’ so to speak. I actually have been working on the same thing, really identifying how to pay my debts down fast. So, I found this site that offered a ‘Pay with Purpose Debt Eliminator.’ It incorporates similar strategies automatically and identifies which debts to pay down first and how much to pay! I really like how simple it is. If you get a chance, check it out: http://www.inoutcash.com Let me know what you think!

]]> By: Ellen http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-10455 Ellen Thu, 22 Apr 2010 04:36:10 +0000 http://20somethingfinance.com/?p=122#comment-10455 Thanks for the information of Debt Consolidation Payment Method. People want to be careful with the idea of Debt consolidation loans. It is very helpful for the people if they list there debts and try to manage in proper way. Debt Consolidation is danger if people don't know the correct procedure how to manage money. If people know the proper procedure regarding managing money Debt Consolidation loan is very helpful. Thanks for the information of Debt Consolidation Payment Method. People want to be careful with the idea of Debt consolidation loans. It is very helpful for the people if they list there debts and try to manage in proper way. Debt Consolidation is danger if people don’t know the correct procedure how to manage money. If people know the proper procedure regarding managing money Debt Consolidation loan is very helpful.

]]> By: Liz http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-10095 Liz Wed, 31 Mar 2010 02:05:49 +0000 http://20somethingfinance.com/?p=122#comment-10095 You forgot to add something about the snowball method (which makes it a good alternative to the higher interest method) which is that as you pay off the smaller debts, that payment adds on to the next debt's payment. To use the example that was given in the article, once the smallest debt (car loan @ $4k) is paid off with $500/mo., that $500 is ADDED ON to the first credit card payment, meaning that you'll start to pay $550 on the credit card, instead of just $450 (the min + the extra $400 in your monthly budget.) After that's paid off, the $550 is added on to the $75 payment on the second credit card, making that monthly payment $625. Your monthly budget will always stay the same with $1600 being allocated towards debt repayment, but it's being applied to fewer and fewer debts as they're paid off. The snowball method is literal in that the payments are getting added onto one another, and figurative in that the psychological boost of paying off smaller debts gets you motivated to keep going. You forgot to add something about the snowball method (which makes it a good alternative to the higher interest method) which is that as you pay off the smaller debts, that payment adds on to the next debt’s payment. To use the example that was given in the article, once the smallest debt (car loan @ $4k) is paid off with $500/mo., that $500 is ADDED ON to the first credit card payment, meaning that you’ll start to pay $550 on the credit card, instead of just $450 (the min + the extra $400 in your monthly budget.) After that’s paid off, the $550 is added on to the $75 payment on the second credit card, making that monthly payment $625. Your monthly budget will always stay the same with $1600 being allocated towards debt repayment, but it’s being applied to fewer and fewer debts as they’re paid off. The snowball method is literal in that the payments are getting added onto one another, and figurative in that the psychological boost of paying off smaller debts gets you motivated to keep going.

]]> By: James http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-5543 James Sat, 21 Nov 2009 10:51:23 +0000 http://20somethingfinance.com/?p=122#comment-5543 Just learn how to manage your own finances and pay off debts without spending more money on another company who is supposed to do what people need to do for themselves. Just learn how to manage your own finances and pay off debts without spending more money on another company who is supposed to do what people need to do for themselves.

]]> By: Thomas http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-4459 Thomas Mon, 31 Aug 2009 04:54:03 +0000 http://20somethingfinance.com/?p=122#comment-4459 You want to get out of debt is noble, but you must do something to get there ... wanted to write and will not serve. In part-time job is a great idea ... Get your resume and network with people. But a part-time employment, again without action, it will not. You must set realistic goals and plan of approach. If your debts credit card, stop using it immediately. If you can not pay cash for something you really can not afford. You already know how interest works against you. Make a list of all your debts and expenses. You may need to give things or at least reduce. Put extra money on your debt and watch the debt reduction in a row. Because debt is the result of the decision, if all the decisions you have made the debt that you are wrong. It is time to regroup and focus. Your answer is not a thing but a combination of increased revenues and reduce costs. You want to get out of debt is noble, but you must do something to get there … wanted to write and will not serve. In part-time job is a great idea … Get your resume and network with people. But a part-time employment, again without action, it will not. You must set realistic goals and plan of approach. If your debts credit card, stop using it immediately. If you can not pay cash for something you really can not afford. You already know how interest works against you. Make a list of all your debts and expenses. You may need to give things or at least reduce. Put extra money on your debt and watch the debt reduction in a row. Because debt is the result of the decision, if all the decisions you have made the debt that you are wrong. It is time to regroup and focus. Your answer is not a thing but a combination of increased revenues and reduce costs.

]]> By: Chris http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3982 Chris Sat, 20 Jun 2009 18:14:49 +0000 http://20somethingfinance.com/?p=122#comment-3982 Debt is the biggest issue facing us all. I found this video on YouTube which really opened my eyes to the importance of getting out of debt: http://www.youtube.com/watch?v=50bWUrKAbwU I am sure you will be as amazed as I was. Debt is the biggest issue facing us all.
I found this video on YouTube which really opened my eyes to the importance of getting out of debt: http://www.youtube.com/watch?v=50bWUrKAbwU
I am sure you will be as amazed as I was.

]]> By: Jason http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3447 Jason Mon, 13 Apr 2009 18:28:15 +0000 http://20somethingfinance.com/?p=122#comment-3447 Strategy 2 is the psychological strategy. Those who are more logical thinkers (majored in engineering, economics, etc.) will probably prefer Strategy 1 because it appeals to their way of thinking. Those who like to make to-do lists and derive satisfaction from checking items off as they are done, and probably those who think more abstractly (majored in philosophy, English, etc.) will find Strategy 2 more effective. These are probably the same kinds of people who tend to get themselves into debt to begin with because discipline logical types of people would naturally tend to make a budget and stick to it (of course, I'm generalizing... this is just food for thought). I put myself in the latter category, so I'd follow Strategy 2. However, another good reason to consider this one is if you pay off a credit card to $0, that one is now available to you for a balance transfer, should it be offered. Then you can use it to pay down your highest interest debt. Even if you don't get a transfer offer, paying off one debt ASAP gives you a little more leverage in negotiating with those other folks. Strategy 2 is the psychological strategy. Those who are more logical thinkers (majored in engineering, economics, etc.) will probably prefer Strategy 1 because it appeals to their way of thinking. Those who like to make to-do lists and derive satisfaction from checking items off as they are done, and probably those who think more abstractly (majored in philosophy, English, etc.) will find Strategy 2 more effective. These are probably the same kinds of people who tend to get themselves into debt to begin with because discipline logical types of people would naturally tend to make a budget and stick to it (of course, I’m generalizing… this is just food for thought).

I put myself in the latter category, so I’d follow Strategy 2. However, another good reason to consider this one is if you pay off a credit card to $0, that one is now available to you for a balance transfer, should it be offered. Then you can use it to pay down your highest interest debt. Even if you don’t get a transfer offer, paying off one debt ASAP gives you a little more leverage in negotiating with those other folks.

]]> By: Nick http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3203 Nick Mon, 16 Mar 2009 02:34:32 +0000 http://20somethingfinance.com/?p=122#comment-3203 Could someone explain me how Strategy 2 (snowball) can be better than Startegy 1 (highest interest first)? Using snowball method you'll always pay more in interests and stay longer in debt! Could someone explain me how Strategy 2 (snowball) can be better than Startegy 1 (highest interest first)? Using snowball method you’ll always pay more in interests and stay longer in debt!

]]> By: Matt http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3086 Matt Tue, 03 Mar 2009 00:52:51 +0000 http://20somethingfinance.com/?p=122#comment-3086 Great article here. About a year ago I started listening to Dave Ramsey after talking to a friend who had employed the snowball technique. I got very motivated and got my snowball rolling. After about 7 months I had paid down $8000 in debt. I then spoke to another friend who used the highest-interest method and saw the value in it. BIG POINT Exactly as is stated above if I had started with the highest-interest method first I don't think I would be successful with my debt payoff currently. I was able to knock out those smaller amounts quickly and it gave myself the wins I needed to stay focused. It's amazing to see the progress. Now that I have a base model and have changed my spending habits I am going to save a lot more money paying off the high-interest amounts first. As an update, in just 14 months I have paid down nearly $17,000 in debt. I still have a ways to go, but I know I will get their by using a combination of the two methods described. Now I preach both to everyone I know! Great article here.

About a year ago I started listening to Dave Ramsey after talking to a friend who had employed the snowball technique.

I got very motivated and got my snowball rolling. After about 7 months I had paid down $8000 in debt. I then spoke to another friend who used the highest-interest method and saw the value in it.

BIG POINT
Exactly as is stated above if I had started with the highest-interest method first I don’t think I would be successful with my debt payoff currently. I was able to knock out those smaller amounts quickly and it gave myself the wins I needed to stay focused. It’s amazing to see the progress.

Now that I have a base model and have changed my spending habits I am going to save a lot more money paying off the high-interest amounts first.

As an update, in just 14 months I have paid down nearly $17,000 in debt. I still have a ways to go, but I know I will get their by using a combination of the two methods described.

Now I preach both to everyone I know!

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